The value chain analysis used in connection with the make or buy decision often leads a firm to make use of:
A)Activity-based costing.
B)Cost-volume profit analysis.
C)Outsourcing activities.
D)Relevant cost-based pricing.
E)Process improvement.

Question

Quizplus · Accepted Answer

The value chain analysis helps a firm identify the activities it can perform efficiently and those that are better outsourced. Thus, choice C - outsourcing activities is the most suitable option. Activity-based costing and cost-volume-profit analysis can be used to aid in the decision-making process but are not directly related to the make or buy decision. Relevant cost-based pricing is also useful but not often used solely in the make or buy decision. Process improvement can enhance value chain activities but is not directly related to the make or buy decision.

The Value Chain Analysis Used in Connection with the Make